Ready, Willing and Able?
The Ombudsman's second Interim Report of 2012 is directed at the industry and specifically focuses on the commission-earning clauses used within estate agents' agency agreements.
Following The Property Ombudsman's renewed call for compulsory redress for letting agents in his Annual Report, his second Interim Report of 2012 is directed at the industry and specifically focuses on the commission-earning clauses used within estate agents' agency agreements.
The TPO Code of Practice for Residential Estate Agents requires agents to clearly explain and unambiguously state in writing the precise basis upon which a commission fee will be earned. Specifically, agency agreements must use the definitions of 'sole agency', 'sole selling rights', and 'ready, willing and able' as set out in the Estate Agents (Provision of Information) Regulations 1991. However, despite this requirement Mr Hamer points out that 'many aspects of the disputes referred to me stem from sellers not understanding the terms of the agency agreement they have entered into and the point at which they become liable to pay the agent's fee'.
'In previous reports I have highlighted that in my experience, many sellers are not aware, and probably do not understand the subtle difference between 'sole agency' and 'sole selling rights', even if they do read the agreement thoroughly,' says Mr Hamer.
However, Mr Hamer goes on to explain that 'recently I have seen a number of disputes which have involved agreements where a 'ready, willing and able' basis has been employed but where the determination of the buyer's status was not straightforward. It has to be clearly evident that a buyer is 'ready' to exchange (perhaps they have sold their own property and are therefore unencumbered), are 'able' (they should have funds readily available to pay the deposit required on exchange and be otherwise qualified financially to proceed) and are 'willing'. However there is plenty of room for interpretation within each of these three words, especially whether a buyer can be considered 'willing' when a transaction does not proceed to exchange'.
The second Interim Report of 2012 discusses the issues surrounding the use of 'ready, willing and able' clauses within agency agreements and provides a number of case studies which emphasise why an explanation of the commission fee earning terms must be given to the client at the point of signing in order to avoid future disputes arising.